Vietnam's November inflation accelerates to highest since May

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Vietnam's inflation accelerated for a third month in November to the highest since May as the government pushes banks to increase lending.

Consumer prices climbed 7.08 percent from a year earlier, after rising 7 percent in October, the General Statistics Office said in Hanoi today. Prices gained 0.47 percent from the previous month.

Inflation is at risk of accelerating toward the end of the year as the government encourages banks to cut lending rates and help businesses, Do Thi Nhung, deputy head of the central bank's monetary policy department, said on Nov. 5.

Price pressures may limit the monetary authority's scope to ease policy and spur an economy set to grow at the slowest pace in 13 years.

"They are between a rock and a hard place," Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd., said before the report. "Inflation will start moving up, and there are both domestic and external factors," he said.

The Vietnamese dong rose 0.1 percent against the dollar on Friday, taking its gains for this year to 0.9 percent. The benchmark VN Index slipped 0.4 percent yesterday.

The nation is targeting growth of 5.2 percent for the full year, faster than the 4.73 percent rate of the first nine months and the slowest pace since 1999. Elevated inflation, partly due to a weak macroeconomic management framework, is a "major downside risk" for Vietnam, the Organization for Economic Cooperation and Development said in a Nov. 18 report.

The central bank has cut its refinancing rate to 10 percent from 15 percent at the start of the year, and its repurchase rate to 8 percent from 14 percent. Vietnam will reduce borrowing costs in 2013 as price pressures decrease, Prime Minister Nguyen Tan Dung told the National Assembly earlier this month.

Transportation-related costs gained 7.39 percent from a year earlier, according to Friday's statement.

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